About Pretty Quant

Pretty Quant aims to education and demystifies misconceptions regarding the quantitative/financial engineering industry, along with encouraging other women (while arming them with the tools) to excel in a hyper-competitive industry.

What is Quantitiative Finance?

Quantitative Finance is the design and implementation of mathematical models used for pricing assets (including derivative products), assessing risk, and predicting market movements. This is important for financial institutions, especially banks, as they consistently take risks by making loans or buying assets and wish to be compensated for that risk.

Quant finance aims to make financial institutions more profitable, but not in the traditional ways of finance. “Business finance” is based on financial theory and the traditional Time Value of Money. It’s more artistic, the models and the assumptions are more simplistic, and the mathematics isn’t any more rigorous than anything you would have taken in elementary school. On the other hand, quant finance attempts to approach finance from a more scientific perspective, by utilizing Mathematics, Probability & Statistics, and Computer Science, with a bit of financial theory.

Also, the traditional finance route usually involves getting a Finance, Accounting, or Economics degree during your undergrad, then pursuing an MBA or an MS in either Finance or Economics, or opting for professional certificates such as the CFA or CPA. However, an advanced degree in traditional finance is usually optional and reserved for people entering highly competitive industries, such as Investment Banking.

Quant Finance, at the very minimum, requires an advanced degree in either financial engineering or something mathematically rigorous

Sounds unnecessarily complicated. Why bother?

Simply put: the world is changing. Finance used to be run by purely business people with finance and accounting backgrounds. We’re utilizing computer science and complex models that deliver results that would typically take people days for financial analysts to compute on Excel and VBA.

There are also some areas in finance, such as financial derivatives (basically the buying and selling of the “right” to do something), which cannot be valued or priced by using the simple Time Value of Money. The computation of these derivative projects is too complex to rely on the financial theory alone. Sometimes, we must utilize more rigorous techniques like advanced mathematics and computer science.

Everyday devices that we rely on, such as computers and cellphones, use complex mathematics and technology that most of us can’t hope to fully understand. Most of us are willing to risk our lives on an airplane guided by satellites and use highly complex technology. It makes no sense to be happy with these technological advances but balk at the idea of financial discipline with some complexity.